India Microfinance

If we continue producing billionaires, it is not going to take us too far. What we need is a focus on the ground reality, said Sam Pitroda, Advisor to Prime Minister on Public Information, Infrastructure and Innovation, in his address at the Financial Inclusion Summit organized by Confederation of Indian Industry (CII), in New Delhi yesterday.

Mr Pitroda said that the imperative of financial inclusion should underpin every initiative directed at the rural poor. “For the first time we are a country of 600 million connected people, however, we need to find out how we can use it for our benefit. A telecom revolution has happened in the last two decades. Everything we do is now obsolete. We are computerising age-old documents of British India under E-governance programme.”

Mr Pitroda added that he is trying to set up new platforms for new generation. “We are today in a unique position to achieve it. We have the vision, resources and the connectivity. This will have far reaching consequences for India,” he said.

It is in the light of millions of connected people, the right technology and a willing government that we need to understand financial inclusion, he said. “May be, financial inclusion is about paradigm shift,” Mr Pitroda added.

He said that mobile banking is the next big challenge for the government as it will change the nature of banking in India. “Concept of money would change drastically. Nature of Federal Reserve would change as a person sitting in India would be able to buy a product in Brazil and pay in Euro or dollars. It would take the banking facility directly into the hands of people.” But he also added that a bank would remain a bank and mobile operators should not think that they will be able to take over a bank’s functionality.

“In future a mobile will have to be integrated with multiple securities. What you need is the leather wallet metaphor,” Mr Pitroda said.

Today a lot of work is being done in the field of Near Field Communication (NFC), he said. “With all these developments happening, the big question is how can we use it for poor people,” he said. He cited the example of postmen disbursing money through mobile in rural areas.

“We are planning to connect 250,000 panchayats through broadband. We want to bring fibre cable to majority of them,” Mr Pitroda informed. He said that achieving financial inclusion is not unrealistic, but financial inclusion cannot be achieved without inclusive growth. “If merchants, bank and operator can come together, they can develop a platform for mobile banking,” he said. He also suggested that financial inclusion would facilitate drastic cut in the transactional cost.

He said, “All the pieces are in place, all we need to do is to develop a will to come together and work for financial inclusion”.

Speaking on developing a model for financial inclusion, Mr Kishore A Chaukar, Managing Director, Tata Industries Limited, said that it is not necessary that just one model can work for the entire system. “It is not right that we superimpose one model on the system. We can develop and use any model. Any argument on the model would mean that we are promoting the model and not financial inclusion.

He added that the concept of fair play has to be looked into before reaching rural people. “The common man has this perception that an urban businessman tries to reach him to exploit him.” He said this perception needs to be changed. “As corporate we must be perceived as a friend and a partner in their progress,” he added.